快扣 (FAST) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fastenal Company Q4 and Fiscal Year 2017 Earnings Results Conference Call. (Operator Instructions)

各位女士、先生，大家好，歡迎參加 Fastenal 公司 2017 財年第四季及全年收益業績電話會議。（操作說明）

It is now my pleasure to hand the conference over to Ms. Ellen Stolts of Investor Relations. Ma'am, you may begin.

現在我很高興將會議交給投資者關係部的艾倫·斯托爾茨女士。女士，您可以開始了。

Welcome to the Fastenal Company 2017 Annual and Fourth Quarter Earnings Conference Call.

歡迎參加 Fastenal 公司 2017 年年度及第四季財報電話會議。

This call will be hosted by Dan Florness, our President and Chief Executive Officer; and Holden Lewis, our Chief Financial Officer. The call will last for up to 45 minutes and will start with a general overview of our quarterly results and operations, with the remainder of the time being open for questions and answers.

本次電話會議將由我們的總裁兼執行長丹·弗洛內斯和我們的財務長霍爾頓·劉易斯主持。電話會議將持續最多 45 分鐘，首先將對我們的季度業績和營運情況進行總體概述，剩餘時間將用於提問和解答。

Today's conference call is a proprietary Fastenal presentation and is being recorded by Fastenal. No recording, reproduction, transmission or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast on the Internet via the Fastenal Investor Relations homepage, investor.fastenal.com. A replay of the webcast will be available on the website until March 1, 2018 at midnight Central Time.

今天的電話會議是 Fastenal 的專有演示，並由 Fastenal 進行錄音。未經 Fastenal 同意，不得對今天的通話進行任何錄音、複製、傳輸或分發。本次電話會議將透過 Fastenal 投資者關係主頁 investor.fastenal.com 在網路上進行音訊同步直播。網路直播的回放將在網站上提供，直至2018年3月1日中部時間午夜。

As a reminder, today's conference call may include statements regarding the company's future plans and prospects. These statements are based on our current expectations and we undertake no duty to update them. It is important to note that the company's actual results may differ materially from those anticipated. Factors that could cause actual results to differ from anticipated results are contained in the company's latest earnings release and periodic filings with the Securities and Exchange Commission and we encourage you to review those factors carefully.

提醒各位，今天的電話會議可能涉及公司未來的計劃和前景。這些聲明是基於我們目前的預期，我們不承擔更新這些聲明的義務。值得注意的是，公司的實際業績可能與預期業績有重大差異。可能導致實際結果與預期結果不同的因素已包含在公司最新的收益報告和定期向美國證券交易委員會提交的文件中，我們建議您仔細閱讀這些因素。

I would now like to turn the call over to Mr. Dan Florness.

現在我將把電話交給丹‧弗洛內斯先生。

Thank you, Ellen, and good morning, everybody, and thank you for joining us on our fourth quarter earnings call. First off, happy new year and welcome to 2018.

謝謝艾倫，大家早安，感謝各位參加我們的第四季財報電話會議。首先，祝大家新年快樂，歡迎來到2018年。

Before I touch on the quarter, I'd just like to share a couple of stories. One is the conversation I had with Bob Kierlin, our Founder of Fastenal, about a week ago. Being -- just finishing my second year in this role, it's nice having Bob around to share thoughts with periodically and I shared with him the -- my President's letter for the annual report we'll be filing here in early February. And he stopped back in after reading through it and he said, "I like your letter, Dan. I do have a question for you, though. On the right-hand column of the first page, I really think you should change it." And I'm like, "Okay." And he said, "It feels like you're on an apology tour because you're frustrated with Q4." And he said, "You know, what are you doing right now?" Your -- Fastenal is working to evolve the business. We're -- we've been ramping up our business activity. We've been ramping up our development activities as it relates to our district managers and our branch managers. We've been ramping up the business to support vending at a higher level and you're ramping up to turn on Onsites, and all of these things require people and energy and a lot of it and we're doing it quickly." And he said, "You know, you've -- we've tripled the number of Onsites we have in a couple of years and we have a whole bunch to turn on. And again, that takes energy to do. Explain that. Don't apologize for it. Explain that." And that was helpful.

在深入探討本季內容之前，我想先分享幾個故事。其中之一是我大約一周前與 Fastenal 的創始人 Bob Kierlin 進行的一次談話。我擔任這個職位才兩年，很高興能時不時地和鮑伯交流想法，我跟他分享了我為2月初提交的年度報告寫的總裁信。他讀完信後又走了進來，說：“丹，我喜歡你的信。”不過，我確實有個問題想問你。「我覺得你第一頁右側那一欄真的應該改一下。」我回答說：「好的。」他說：「感覺你好像在到處道歉，因為你對第四季度很不滿意。」然後他又問：「你知道嗎，你現在在做什麼？」你們——Fastenal 正在努力推動業務發展。我們一直在加大業務力度。我們一直在加強進行與區域經理和分行經理相關的發展活動。我們一直在增加業務力度，以支援更高水準的自動販賣機業務，而你們也在加緊啟動現場服務，所有這些都需要人力、精力和大量資源，而且我們正在快速推進。 」 他說，「你知道，在短短幾年內，我們的現場服務數量已經翻了三倍，而且我們還有很多服務需要啟動。 」而且，這樣做也需要消耗能量。請解釋一下。不必為此道歉。請解釋一下。 」 這很有幫助。

I did modify my President's letter as a result and, hopefully, explaining it better. One thing you'll notice when you read the President's letter, I touch a lot on the -- what we're trying to accomplish as well as I explained a lot about the year from the standpoint of pretax because if you get into after-tax, it starts to get a little noisy and we'll touch on that later in the comments.

因此，我修改了總統信函，希望這樣能更好地解釋清楚。當你閱讀總統的信時，你會注意到，我著重談到了我們正在努力實現的目標，並且從稅前的角度解釋了很多關於這一年的情況，因為如果談到稅後，情況就會變得有點複雜，我們稍後會在評論中討論這個問題。

The other aspect of the story is the conversation I had with our RVPs this morning, our regional vice presidents. In that call at 7:00 Central this morning, I thanked them for 2017, wished them all very good luck in 2018; shared with them my thoughts on the health and capabilities of our business and how much that's improved in the current year; and the excitement there is when we have financial success, career success, our customers have a good year; but I challenged them on a few points, and the first one centered on gross margin.

故事的另一個面向是我今天早上與我們區域副總裁們的談話。今天早上中部時間 7 點的電話會議上，我感謝了他們在 2017 年的支持，祝愿他們在 2018 年一切順利；我與他們分享了我對公司業務健康狀況和能力的看法，以及今年業務的改善程度；我還分享了我們在財務、職業發展以及客戶業績方面取得成功時的激動；但我向他們提出了一些問題質疑的心情。

And in the last call, I really felt our gross margin in the fourth quarter would come in at 49% and we're about 20 basis points below where I thought we'd be. And if you think of our gross margin, there's really -- we talk about customer mix and end market mix. I oftentimes think about it in the simple context of there's really 3 components, ignoring customer mix for a second, as fasteners, non-fasteners and freight. When you move in a relatively inexpensive product per pound around a large continent, freight's a big deal as well.

在上一次電話會議上，我真的覺得我們第四季的毛利率會達到 49%，而我們比我預想的低了大約 20 個基點。如果你考慮我們的毛利率，你會發現——我們談論的是客戶組合和終端市場組合。我經常從簡單的角度來思考這個問題，暫且忽略客戶組合，它實際上由三個部分組成：緊固件、非緊固件和貨運。當你在一個幅員遼闊的大陸上運送單價相對低廉的產品時，運費也是一筆不小的開銷。

In the case of non-fasteners, our largest group of products, it's about 2/3 of our business. A lot of noise in the summer and fall about what was going on in that marketplace. A lot of e-commerce change really impacting that marketplace. A lot of noise in the market, some competitors lower -- adjusting their prices and what that might mean for Fastenal. Right now, non-fasteners -- and our non-fasteners, about 25% of that goes through a vending platform so we go to market in a very different channel than our competitors.

非緊固件類產品是我們最大的產品類別，約占我們業務的 2/3。夏秋兩季，關於那個市場發生的事情有很多傳言。電子商務領域的許多變革確實對該市場產生了影響。市場噪音很大，一些競爭對手降低了價格，這對 Fastenal 來說可能意味著什麼。目前，非緊固件產品——以及我們的非緊固件產品，其中約 25% 透過自動販賣機平台銷售，因此我們進入市場的通路與競爭對手截然不同。

Our non-fastener business is growing as strong as it's ever grown. Holden will touch on that later in the call. Our gross margin in non-fasteners was 10 basis points higher in the fourth quarter than it was in the third and it's dead-on even with where it was a year ago. And I feel really good about that. All the noise that's going on, all the stuff that's going on in the marketplace, our team is reacting very well and I shared that with our team this morning.

我們的非緊固件業務正以前所未有的強勁勢頭成長。霍爾頓稍後會在電話會議中談到這一點。第四季非緊固件業務的毛利率比第三季高出 10 個基點，與一年前的水平持平。我對此感到非常滿意。面對市場上的各種喧囂和紛擾，我們的團隊應對得非常好，今天早上我已將這一點分享給了我們的團隊。

In the case of fasteners, we've seen our gross margins slip from both a year ago and from third quarter. And there's really 2 things that are driving it: One, a disproportionate amount of the growth is coming from large customers, a lot of OEM fasteners, and that's always going to hurt margin and I get that; but part of the slippage is occurring because the fasteners are seeing inflation right now and we're a little rusty on addressing that. Perhaps I'm not pushing the group fast enough, perhaps the group isn't moving fast enough or maybe it's a little bit of both. We're a little rusty on that. We lost some gross margin in the quarter, but that's not what was frustrating me because I believe that's fixable and I believe the things we have in motion will fix that.

就緊固件而言，我們發現毛利率較去年同期和第三季均有所下滑。真正推動這一趨勢的有兩個因素：一是成長的大部分來自大客戶，很多都是 OEM 緊固件，這總是會損害利潤率，我明白這一點；但部分下滑的原因是緊固件目前正面臨通貨膨脹，而我們在應對這個問題上有點生疏了。也許是我推動團隊的速度不夠快，也許團隊的行動速度不夠快，或者兩者兼具。我們在這方面有點生疏了。本季我們的毛利率有所下降，但這並不是讓我感到沮喪的原因，因為我相信這是可以解決的，而且我相信我們正在採取的措施將會解決這個問題。

What frustrated me was on the freight side. In an uncustomary fashion, we were sloppy on freight in the fourth quarter. And it's not a revenue problem, it's an expense problem and we were careless and sloppy and it -- it involved our distribution centers, it involved our branch network and it involved everybody that supports those 2. So it involved 20,000 people and we were careless in the fourth quarter and that's where our 20 basis points is -- was lost.

讓我感到沮喪的是貨運方面。與往常不同，我們在第四季的貨運方面處理得不夠認真。這不是收入問題，而是支出問題。我們粗心大意，草率行事，這涉及到我們的配送中心、分支機構網路以及所有支援這兩個部門的人員。所以，這牽涉到 2 萬人。我們在第四季粗心大意，這就是我們損失 20 個基點的原因。

We always deleverage a little bit in the fourth quarter because our sales are dropping off, but we did more than normal and that was frustrating me. Bob also pointed out, "Yes. And some of that is because you're adding capacity to handle the volumes you see in the new year and to support those Onsites that are turning on. Never lose sight of that. And -- but if you're being sloppy, just fix it. Don't (inaudible) , just fix it." So that was my conversation with our RVPs that's related to gross margin.

由於銷售額在第四季度下滑，我們通常會稍微降低槓桿率，但我們降低的幅度比平常大，這讓我很沮喪。鮑勃還指出：“是的。”部分原因是，你們正在增加產能以應對新年的業務量，並支持那些正在啟動的現場服務。永遠不要忘記這一點。但是──如果你做事馬虎，那就改正它。別（聽不清楚），趕緊解決它。 」 這就是我和區域副總裁們關於毛利率的對話。

Our second conversation talked about -- we spoke about rent and I'm talking about dollars spent on rent throughout our network. A year ago, I really challenged the group and said, "We need to look at the dollars we spend on our buildings." And from Q1 2017 to Q4 2017, it can't grow. And in our 50-year history, that's never happened. But this year, it can't because we -- as we're migrating to the Onsite platform, as we're continuing to leverage and lean up our income statement to be more nimble in the marketplace, that can't grow.

我們的第二次談話談到了——我們談到了租金，我指的是我們整個網路在租金上花費的美元。一年前，我曾嚴厲批評團隊，我說：「我們需要審視我們在建築上的支出。」從2017年第一季到2017年第四季度，這筆支出不能再成長了。在我們50年的歷史中，這種情況從未發生過。但今年不行，因為我們正在向 Onsite 平台遷移，我們正在繼續利用和精簡我們的收入報表，以便在市場中更加靈活，所以無法成長。

I'm pleased to say between the first quarter of 2017 and the fourth quarter of 2017, the rent dollars we spent dropped $360,000. Now, on the context of a $4.5 billion company, that might not mean a lot. It was huge in our business because we'd never done it before. And I challenged them to do it again in the next 12 months between Q4 '17 and Q4 '18. Let's repeat that feat.

我很高興地告訴大家，從 2017 年第一季到 2017 年第四季度，我們的租金支出減少了 36 萬美元。然而，對於一家市值 45 億美元的公司來說，這可能不算什麼。這對我們公司來說意義重大，因為我們以前從未做過這件事。我向他們發起挑戰，讓他們在 2017 年第四季到 2018 年第四季之間的 12 個月內再次做到這一點。讓我們再次做到。

Some of it's occurring because we're consolidating some of the business where -- as we're moving some of our business into Onsites, as our growth is driving into Onsites, we're rationalizing everything we do and we're consolidating some branches. But everything we're doing, we're doing to grow faster. It isn't about saving expense dollars, but I did want to see if we could harvest some of that because I'd rather deploy those dollars elsewhere, which brings us to the quarter.

部分原因是由於我們正在整合一些業務——隨著我們將一些業務轉移到現場服務，隨著我們的成長也轉向現場服務，我們正在合理化我們所做的一切，並整合一些分支機構。但我們所做的一切，都是為了更快發展。這不是為了節省開支，而是想看看我們能否從中節省一些，因為我更願意把這些錢用在其他地方，這就引出了季度問題。

The -- our pretax earnings for the fourth quarter of 2017 and for 2017 grew double digits. I can't think of a better way to celebrate 50 years in business. Our earnings per share for the year came in at just over $2, $2.01. That's a bit noisy of a number given that we had some tax legislation passed late in the year and that impacted our income statement.

我們的稅前利潤在 2017 年第四季和 2017 年全年均實現了兩位數的成長。我想不出還有什麼比這更好的方式來慶祝公司成立50週年了。我們今年的每股盈餘略高於 2 美元，即 2.01 美元。考慮到年底通過的一些稅收立法對我們的損益表產生了影響，這個數字有點波動。

As you all know, most of our revenue and most of our profits are generated in the United States of America. I think it's just over 85%, I think it's 88% to be exact. And we have historically paid a tremendous penalty for being a U.S.-based business in our global marketplace. And our tax rate has been dropping over the years as our international's gotten to be bigger. So it creates some noise.

眾所周知，我們的大部分收入和利潤都來自美國。我認為略高於 85%，準確來說是 88%。歷史上，作為一家總部位於美國的企業，我們在全球市場付出了巨大的代價。隨著我們國際業務規模的擴大，我們的稅率這些年來一直在下降。所以它會產生一些噪音。

But if you look at ignoring that tax change, our earnings in the -- our pretax earnings -- well, our earnings, excuse me, would have grown about 12% -- just over 12% in the quarter and just over 11% in the year. Again, an excellent way to finish the year.

但如果不考慮稅收變化，我們的收益——我們的稅前收益——哦，抱歉，我們的收益，本季度將增長約 12%——本年度將增長約 12%——年增長率略高於 11%。再次強調，這是結束這一年的絕佳方式。

Daily sales growth is strong in the fourth quarter. We grew almost 15%. That was lifted a little bit by our Mansco acquisition earlier in the year. Without it, we would just have been over 13%. And for the year, our daily sales grew 11%.

第四季每日銷售額成長強勁。我們成長了近15%。今年稍早收購 Mansco 後，情況有所改善。如果沒有它，我們的成長率只會超過 13%。今年，我們的日銷售額成長了 11%。

As mentioned, we are aggressively investing to support our Onsite initiative, our vending initiative, our e-commerce initiatives, but we obtained growth -- good operating leverage in the fourth quarter and for the year. I believe we can sustain this momentum as we go into 2018.

正如前面所提到的，我們正在積極投資以支持我們的現場服務計劃、自動販賣機計劃和電子商務計劃，但我們在第四季度和全年都實現了成長——良好的營運槓桿。我相信我們可以將這種勢頭保持到2018年。

There was a little window dressing going on by some of our customers late in the year and our cash payments just abruptly halted between Christmas and New Year and cash came in like crazy the first week of January, so a little window dressing that hurt our cash flow late in the year.

年底的時候，我們的一些客戶做了些粉飾賬目的工作，導致聖誕節到新年期間我們的現金支付突然停止，而一月份的第一周現金又像潮水般湧入，所以年底的時候，一些粉飾賬目的行為損害了我們的現金流。

I'm pleased with the fact that after making a sizable investment in what we called CSP 16, our inventory in 2016, we were able to lower our days on hand of inventory nominally in the 2017 and we'll work to do that again in 2018. And that was the third item I covered with the RVP group this morning.

令我欣慰的是，在 2016 年對我們稱之為 CSP 16 的庫存進行了大量投資之後，我們在 2017 年的庫存週轉天數略有下降，我們將在 2018 年繼續努力實現這一目標。這是我今天上午與RVP小組討論的第三項內容。

Our share price has had a nice run in recent months. Really, in 2017 in general, it looks happy along the way, but it had a nice run. And because of that and our desire to maintain a meaningful dividend for our shareholders, we raised our dividend as we announced last night.

近幾個月來，我們的股價表現不錯。總的來說，2017 年它看起來一路順風順水，而且它已經走過了一段美好的時期。正因如此，也為了維持股東可觀的股息，我們提高了股息，正如我們昨晚宣布的那樣。

Our -- I'm going to Page 2 of the flip book if you're following along, but our Onsite initiative used to be a regional thing. It was something we were doing aggressively. We were doing aggressively in some of our older regions, especially in the upper Midwest. We were doing it aggressively in Mexico and seeing incredible growth in recent years because of it. What I'm really proud of is we've turned Onsite, a regional thing, into a company thing.

我們的——如果你跟著的話，我要翻到翻頁書的第 2 頁了，但是我們的現場服務計劃以前是一個區域性項目。這是我們當時積極推進的事情。我們在一些老市場區域，特別是中西部北部地區，採取了積極的策略。我們在墨西哥大力推廣這項業務，近年來也因此獲得了驚人的成長。我最引以為傲的是，我們已經把 Onsite 這種區域活動發展成了公司層面的活動。

Two years ago when we really started to move the Onsite signings up, we moved the needle because instead of signing a handful, 8, 10, 12 Onsites in the year, we signed just over 75 because 25% of our district managers went out and signed an Onsite. Our businesses -- our success stems a lot from that group, about 240-some people scattered around the planet, mostly North America.

兩年前，當我們真正開始提高現場簽約量時，我們取得了顯著成效，因為以前一年只能簽下寥寥幾份（8、10、12份）現場簽約合同，而現在我們簽下了超過75份，因為我們25%的區域經理都出去簽了現場簽約合同。我們的業務—我們的成功很大程度上源自於這個群體，大約 240 多人分散在世界各地，主要分佈在北美。

In 2016, we dramatically increased our Onsite signings, added about 100 to it because 52% of our district managers signed an Onsite that year. Coming into this year, we had big goals to expand that another 100. We came in at 270 Onsites because 73% of our district managers signed an Onsite this year. It's not a regional thing anymore, it's a company thing. And it's moving the needle on our business, it's moving the needle on our growth.

2016 年，我們的現場簽約量大幅增加，增加了約 100 筆，因為那一年我們有 52% 的區域經理簽署了現場簽約協議。今年年初，我們定下了遠大的目標，再擴大 100 家公司。我們最終完成了 270 次現場考察，因為今年我們 73% 的區域經理都簽署了現場考察協議。這不再是地域性問題，而是公司層面的問題了。它正在推動我們的業務發展，推動我們的成長。

We have a big goal for next year. Let's add another 100. Don't know if we'll hit that goal, but our stated goal right now is 360 to 385. If you were in some of our internal meetings, you might even hear us say, "Heck, let's go for 400." But our stated goal is 360 to 385.

我們明年有一個遠大的目標。我們再加100。不知道我們能否達到這個目標，但我們目前的目標是 360 到 385。如果你參加過我們的一些內部會議，你甚至可能會聽到我們說：「嘿，咱們爭取達到 400 個吧。」但我們既定的目標是 360 到 385 個。

With the expansion of our Onsite, we have almost 3,000 in-market locations across the planet today, again, most in North America, versus just over 2,900 a year ago. We signed 19,355 vending devices in 2017, up nicely from last year. The one positive as we've rapidly expanded our footprints, we've grown in basically a decade from literally no vending machines to just over 70,000.

隨著我們的現場服務業務的擴展，我們目前在全球擁有近 3,000 個市場服務點，其中大部分位於北美，而一年前這一數字僅為 2,900 多個。2017年我們簽約了19,355台自動販賣機，比去年有了顯著成長。在我們迅速擴大業務範圍的過程中，唯一值得欣慰的是，我們在短短十年內就從幾乎沒有自動販賣機發展到擁有超過 7 萬台自動販賣機。

When you do something very quickly, you make some mistakes along the way, you're aggressive along the way. And we remove a number of devices. We install 10, we really need 8. We installed 5, we really need 4, that kind of stuff. Sometimes we installed one, maybe we shouldn't have installed that one.

當你快速做某件事時，過程中難免會犯一些錯誤，做事方式也會比較激進。我們移除了一些設備。我們安裝了 10 個，但實際上只需要 8 個。我們安裝了 5 個，但實際上只需要 4 個，諸如此類的事情。有時候我們安裝了一些東西，也許我們不應該安裝它們。

And so one thing that's very uplifting when I look at 2017 is the percentage of devices, what we're removing every year is starting to improve. And we saw that in the final 3 quarters of 2017. So said another way, you can fill the sink a lot faster if you turn on the faucet and you plug the drain, and we plugged up the drain a bit. Our goal is to sign 21,000 to 23,000 devices this year.

因此，回顧 2017 年，最令人振奮的一點是，我們每年淘汰的設備比例開始改善。我們在 2017 年最後三個季度看到了這一點。換句話說，如果你打開水龍頭並堵住排水口，水槽就能更快地註滿水，而我們確實把排水口堵住了一點。我們今年的目標是簽約 21,000 至 23,000 台設備。

National Accounts. The group is executing at an unbelievable level. They're busy, they're creating a lot of work at our branch network and they're creating the need for us to invest heavily. Our National Accounts grew 14.5% for the year, 18.5% in the fourth quarter. My compliments to the group and to everybody else in the company who supports that business.

國民帳戶。這個團隊的表現令人難以置信。他們很忙，為我們的分公司網絡帶來了很多工作，也讓我們需要進行大量投資。我們的國民帳戶全年增長了 14.5%，第四季度增長了 18.5%。我向該團隊以及公司裡所有支持這項業務的人表示祝賀。

Finally, that's not a bullet on the chart. Our construction has gained momentum as we've gone through 2017 and that's a really pleasing thing because in the last decade, we became an ever better company in the industrial market. We doubled in size, but our construction business in that same decade grew about 35%. That's a cumulative number, not an annual number, a cumulative number. We really struggled to gain footing and growth. We started to get a taste of that as the year went on. Our goal was to grow 5%. I think, for the year, we grew around 6%, but we exited the year growing double-digits. So I feel really good about what that means for 2018.

最後，這並非圖表上的一個項目符號。進入 2017 年，我們的建設發展勢頭強勁，這真是一件令人欣慰的事情，因為在過去的十年裡，我們在工業市場中已經發展成為一家越來越優秀的公司。我們的規模擴大了一倍，但在同一十年裡，我們的建築業務成長了約 35%。這是一個累計數字，不是年度數字，而是累計數字。我們當時真的很難站穩腳步，發展壯大。隨著時間推移，我們開始體會到這一點。我們的目標是成長5%。我認為，就全年而言，我們的成長率約為 6%，但到年底時，我們的成長率達到了兩位數。所以我覺得這對2018年來說意義重大。

With that, I've overstayed my welcome. I'll let Holden talk.

這樣看來，我逗留太久了，不受歡迎。我讓霍爾頓來說吧。

Great. Thank you, Dan. Good morning. I'm going to begin with a quick recap of our 2017 results before moving on to the discussion of the quarterly performance.

偉大的。謝謝你，丹。早安.在討論季度業績之前，我將先快速回顧我們 2017 年的業績。

In 2017, Fastenal generated $4.4 billion in sales, which is up 10.8% from 2016. We had one fewer selling day in the year so, on a day's basis, we were up 11.3%. We did get the economic tailwind that began in late first quarter and strengthened throughout the year. However, we also believe our growth drivers have allowed us to outgrow the marketplace and I want to provide a little bit more color on those.

2017 年，Fastenal 的銷售額為 44 億美元，比 2016 年成長了 10.8%。今年我們少了一天的銷售日，所以以日計算，我們成長了 11.3%。我們確實迎來了從第一季末開始並貫穿全年的經濟成長利好。然而，我們也相信我們的成長動力使我們能夠超越市場，我想就此做一些更詳細的說明。

For vending, excluding units in our leased locker program, we finished 2017 with over 71,000 installed machines, up 8,600 units or 14% over 2016. Signings were below our full year goal but up 7%, but at the highest level since 2013. We also saw higher revenue per machine of 2% to 3% and removals were down 4% and because of that, revenue through our machines rose more than 15% in 2017. In 2018, we're targeting signings of 21,000 to 23,000.

就自動販賣機而言，不包括我們租賃儲物櫃計劃中的設備，我們在 2017 年結束時已安裝了超過 71,000 台機器，比 2016 年增加了 8,600 台，增幅達 14%。簽約人數低於我們全年的目標，但成長了 7%，而且是自 2013 年以來的最高水準。我們也看到每台機器的收入提高了 2% 到 3%，而移除量下降了 4%，因此，2017 年我們機器的收入增加了 15% 以上。2018年，我們的目標是簽約21000至23000人。

We signed 270 new Onsite agreements in 2017, shy of our goal of 275 to 300, but well above last year's 176 signings. Growth of sales through Onsites, excluding branch transfers, accelerated through 2018 and was up 22% for the full year. We're targeting 360 to 385 signings in 2018.

2017 年，我們簽署了 270 份新的現場協議，雖然距離 275 至 300 份的目標還有一段距離，但遠高於去年的 176 份。2018 年，不包括分行調撥在內的現場銷售成長加速，全年成長 22%。我們的目標是在 2018 年簽約 360 至 385 名球員。

Lastly, National Accounts paced the overall business with daily sales growth of 14.5% in 2017. Sales to our largest customers accelerated through the year with December up 19.7%. Through a greater extent than last year, this was achieved both through a combination of new accounts and by penetrating existing accounts.

最後，全國客戶業務在 2017 年以 14.5% 的每日銷售額成長率領先整體業務。年內，我們面向最大客戶的銷售額持續成長，12 月成長了 19.7%。與去年相比，今年的實現程度更大，這既是透過開發新客戶實現的，也是透過拓展現有客戶實現的。

Margins in 2017 stabilized. Our gross margin finished at 49.3%, which was down 30 basis points. This was largely due to product margin, which was mostly impacted by a combination of product and customer mix and the inclusion of Mansco since acquiring it on March 31.

2017年利潤率趨於穩定。我們的毛利率最終為 49.3%，下降了 30 個基點。這主要是由於產品利潤率，而產品利潤率主要受到產品和客戶組合以及自 3 月 31 日收購 Mansco 以來將其納入公司營運的影響。

Operating margin finished 2017 at 20.1%, flat with last year. Operating expense leverage offset the gross margin decline, which was most significantly attributable to occupancy as we shut 120 net public branches in 2017. This was partly offset by the absence of vendor freight credits received in 2016 related to CSP 16, increased amortization and higher legal settlement activity.

2017 年營業利益率為 20.1%，與前一年持平。營運費用槓桿作用抵消了毛利率的下降，這主要是由於我們在 2017 年關閉了 120 家淨公共分支機構，導致入住率下降。部分原因是 2016 年未收到與 CSP 16 相關的供應商運費抵免、攤銷增加以及法律和解活動增加。

At the gross margin line, mix will likely remain a headwind in 2018. We've recently taken actions to offset product inflation and the degree to which this variable affects gross margin in 2018 will depend on the effectiveness of these actions. At the operating expense line, we think there's room to leverage occupancy further and we would expect some leverage over employee-related expenses as growth in incentive compensation moderates.

2018 年，產品組合對毛利率的影響可能仍將是不利因素。我們最近採取了一些措施來抵銷產品通膨，而這個變數在 2018 年對毛利率的影響程度將取決於這些措施的有效性。在營運費用方面，我們認為還有進一步利用入住率的空間，隨著激勵性薪資成長放緩，我們預計在員工相關費用方面也會有一些槓桿作用。

Our interest expense was up 40% in 2017 owing to higher rates of the debt assumed in the Mansco acquisition. Our tax rate fell from 36.8% in 2016 to 33.7% in 2017 due largely to the discrete items related to the recently passed tax reform, which I'll discuss in the quarterly recap. Excluding this, our tax rate would have been 36.5% in 2017.

由於收購 Mansco 時承擔的債務利率較高，我們的 2017 年利息支出增加了 40%。由於最近通過的稅務改革的相關項目，我們的稅率從 2016 年的 36.8% 降至 2017 年的 33.7%，我將在季度回顧中討論這些項目。除去這部分，我們2017年的稅率本應為36.5%。

It all blended to a full year 2017 EPS figure of $2.01, up 16.2% from 2016. If I exclude the discrete tax items, our EPS would have been $1.92, up 11.3% from 2016.

所有這些因素綜合起來，使得 2017 年全年每股收益達到 2.01 美元，比 2016 年增長 16.2%。如果排除個別稅收項目，我們的每股收益將為 1.92 美元，比 2016 年增長 11.3%。

Now, shifting to the fourth quarter and looking at Slide 5 of the deck. As Dan stated, total and daily sales were up 14.8% in the fourth quarter, which represents acceleration from 13.6% daily sales growth in the third quarter. Mansco contributed 140 basis points to this growth. The fourth quarter finished well with December's daily sales growth coming in at up 14.7% or up 13.3%, excluding Mansco.

現在，我們進入第四部分，來看簡報的第 5 張投影片。正如丹所說，第四季總銷售額和日銷售額成長了 14.8%，比第三季 13.6% 的每日銷售額成長率有所加快。Mansco 為這一增長貢獻了 140 個基點。第四季收官良好，12 月的每日銷售額成長了 14.7%，如果不包括 Mansco，則成長了 13.3%。

In terms of market tone, conditions remain healthy. Macro data remained favorable with the PMI averaging 58.9 in the fourth quarter. Industrial production growth accelerated. It's now rising at a low to mid-single-digit rate. Manufacturing end markets continued to lead with strength in heavy and general manufacturing, transportation and energy.

就市場基調而言，市場狀況依然良好。宏觀經濟數據依然向好，第四季採購經理人指數（PMI）平均為58.9。工業生產成長加速。目前正以個位數低至中等的速度上漲。製造業終端市場持續保持領先地位，其中重型和一般製造業、運輸業和能源業表現強勁。

The positive inflection in the quarter was in construction, as Dan mentioned, which was up 9.6% in the fourth quarter and was up 11.9% in December. Feedback from the field on construction began to improve late in the first quarter. The uptick in November and December seems to reflect activity levels catching up with that sentiment.

正如丹所提到的，本季積極的轉折點出現在建築業，第四季成長了 9.6%，12 月成長了 11.9%。第一季後期，現場對施工狀況的回饋開始好轉。11月和12月的成長似乎反映出經濟活動水準正在跟上這種趨勢。

From a product standpoint, we experienced acceleration in both fastener and non-fastener lines. From a customer standpoint, National Accounts accelerated again, growing 18.4% in the quarter with 72% of our top 100 accounts growing. Growth to smaller customers was steady and nearly 65% of our branches grew in the fourth quarter, up from 64% in the third quarter and 62% in the second.

從產品角度來看，緊固件和非緊固件產品線都出現了加速成長。從客戶的角度來看，全國性客戶再次加速成長，本季成長了 18.4%，前 100 名客戶中有 72% 實現了成長。面向小型客戶的成長保持穩定，第四季近 65% 的分公司實現了成長，高於第三季的 64% 和第二季的 62%。

We have no reason to believe that the demand we experienced in the fourth quarter hasn't continued into the first quarter. That said, be aware that the storms in the eastern and southern regions of the U.S. have had a significant impact on business activity in the first half of January.

我們沒有理由相信第四季的需求沒有延續到第一季。儘管如此，需要注意的是，美國東部和南部地區的風暴對1月上半月的商業活動產生了重大影響。

Now on to Slide 6. Year-over-year, our gross margin was 48.8% in the fourth quarter, down 100 basis points from the fourth quarter of '16. We had a particularly difficult comparison with the fourth quarter of '16 gross margin having been unseasonally strong on the back of vendor credits received as a result of CSP 16. We experienced a downtick in our product margin as a result of mix, inclusion of Mansco and, to a lesser degree, product inflation in fasteners. Freight was a significant drag in the period owing to higher payments to third party shippers and incremental investment in drivers and equipment.

現在來看第 6 張投影片。與去年同期相比，我們第四季的毛利率為 48.8%，比 2016 年第四季下降了 100 個基點。由於 2016 年第四季毛利率因 CSP 16 而獲得的供應商信用額度而異常強勁，因此我們面臨著特別艱難的比較。由於產品組合變化、納入 Mansco 產品以及緊固件價格上漲（程度較輕），我們的產品利潤率下降。由於向第三方托運人支付的款項增加以及對司機和設備的額外投資，貨運在這段期間成為一大拖累因素。

On a sequential basis, our gross margin was down 30 basis points. While it is not unusual for our gross margin to decline sequentially, we did expect slightly better. And I think 2 things are notable: First, the freight variables cited in the annual comparison fell heavily into the fourth quarter relative to the third; second, the fourth quarter did see price/cost pressure in our fastener line. This was modest in the period. However, given continued inflationary conditions in the marketplace, we did initiate actions in the fourth quarter, including pricing, to defend our profitability. We would expect these actions to provide stability to our margins in 2018.

與上一季相比，我們的毛利率下降了30個基點。雖然我們的毛利率環比下降並不罕見，但我們原本預期情況會略好一些。我認為有兩點值得注意：第一，年度比較中提到的貨運變數在第四季度相對於第三季大幅下降；第二，第四季我們的緊固件產品線確實面臨價格/成本壓力。在當時，這算是相當小的。然而，鑑於市場持續的通膨狀況，我們在第四季度採取了包括定價在內的措施來捍衛我們的獲利能力。我們預計這些措施將在 2018 年為我們的利潤率提供穩定性。

Our operating margin was 18.7% in the fourth quarter, down 60 basis points year-over-year. The 100 basis point decline in gross margin was partially offset by 40 basis points of operating expense leverage.

第四季我們的營業利潤率為 18.7%，年減 60 個基點。毛利率下降 100 個基點，但營運費用槓桿作用提高了 40 個基點，部分抵消了毛利率的下降。

Looking at the components of that, occupancy-related expenses were down 1%, the largest element being the continued reduction of our public branches in the quarter and through the year. Selling transportation-related expenses were up 7.4%. The most significant element of that was a 17% rise in fuel primarily from higher prices for unleaded. This leverage was partly offset by the cumulative effect of small items such as lower vendor credits given the absence of a major CSP initiative in '17, higher legal costs and higher amortization. Employee-related costs were up 15.5%, 120 basis points of which relate to Mansco's headcount and incremental expenses related to implementation of last year's DOL rules, the latter of which will fully anniversary in the first quarter of '18. The remaining increase is a function of the reset of incentive comps throughout the organization given our return to strong growth in 2017 and an increase in overall staffing. Total headcount growth was up 4.8% or up 7.7% on an FTE basis. It all blended to a fourth quarter EPS figure of $0.53, up 33.5% from fourth quarter of '16.

從各個組成部分來看，與辦公室相關的支出下降了 1%，其中最大的因素是本季和全年公共分支機構的持續減少。銷售運輸相關費用增加了 7.4%。其中最顯著的因素是燃油價格上漲了 17%，主要是由於無鉛汽油價格上漲。這種槓桿作用部分被一些小項目的累積效應所抵消，例如由於 2017 年沒有重大的 CSP 計劃，供應商信用額度降低，法律成本增加，攤銷費用增加。與員工相關的成本上升了 15.5%，其中 120 個基點與 Mansco 的員工人數和去年美國勞工部規則實施相關的增量支出有關，後者將於 2018 年第一季完全生效。剩餘的成長是由於我們在 2017 年恢復強勁成長以及整體員工人數增加的情況下，對整個組織的激勵薪酬進行了重置。總員工人數增加了 4.8%，以全職員工人數計算增加了 7.7%。所有這些因素綜合起來，使得第四季每股收益達到 0.53 美元，比 2016 年第四季成長了 33.5%。

The quarter included 2 discrete tax items: A gain related to deferred taxes on fixed assets and a charge related to a transition tax on foreign cash and earnings. This added up to a onetime tax benefit of $24.4 million. Excluding the discrete items, our tax rate would have been 36.2% and our EPS would have been $0.45, up 12.2%. We are still refining our understanding of various elements of tax reform, but expect our full year rate to settle at a range of 24% to 26%, excluding any additional discrete items that may arise during the year.

本季包含 2 個獨立的稅務項目：與固定資產遞延所得稅相關的收益和與外國現金和收益過渡稅相關的費用。這相當於一次性稅收優惠2440萬美元。如果排除個別項目，我們的稅率將為 36.2%，每股收益將為 0.45 美元，成長 12.2%。我們仍在不斷完善對稅收改革各個方面的理解，但預計全年稅率將在 24% 至 26% 之間，不包括任何其他年內可能出現的特殊項目。

Turning to Slide 7. We generated $129 million in operating cash in the fourth quarter, which was 85% of net income. We believe this is a function of the timing of receivables, which I'll cover in a moment. For the full year of 2017, we generated a record $585 million, which represented 101% of net income.

請看第 7 張投影片。第四季我們產生了 1.29 億美元的經營現金，佔淨收入的 85%。我們認為這與應收帳款的到帳時間有關，我稍後會詳細介紹。2017 年全年，我們創造了創紀錄的 5.85 億美元收入，佔淨收入的 101%。

These improvements are primarily a function of better earnings. Net capital spending in 2017 was $113 million, down 39%, largely from the absence of spending on vending machines related to leased lockers. This is below our target for 2017 of $127 million, which cannot be attributed to a single item but to slightly lower capital spending in a number of places in the company. For 2018, we are anticipating capital spending of $149 million with the increase being largely attributable to spending, upgrading or expending hub capacity and property purchases for potential future expansion.

這些改善主要歸功於收益的提高。2017 年淨資本支出為 1.13 億美元，下降了 39%，主要是由於與租賃儲物櫃相關的自動販賣機支出減少。這低於我們 2017 年 1.27 億美元的目標，這並非單一項目所致，而是公司多個部門資本支出略有下降的結果。2018 年，我們預計資本支出為 1.49 億美元，成長主要歸因於用於升級或擴大樞紐容量以及為未來潛在擴張而購買的房產。

We finished the year with debt comprising 16.5% of total capital, consistent with last year and a level that provides ample liquidity to invest in our business and pay our dividend. Given our expectations for earnings and cash flow in 2018 and our desire to maintain an attractive dividend yield, we have increased our quarterly dividend from $0.32 to $0.37 in the first quarter.

今年年底，我們的債務佔總資本的 16.5%，與去年持平，這一水平為我們提供了充足的流動性，可以投資於我們的業務並支付股息。鑑於我們對 2018 年收益和現金流的預期，以及我們保持有吸引力的股息收益率的願望，我們已將第一季度的季度股息從 0.32 美元提高到 0.37 美元。

In terms of working capital, we were pleased with inventories. Excluding Mansco, our inventories were up 8%, trailing sales growth due to the ability to leverage the heavy investment in branch inventory in 2016 and more energy enterprise-wide on this line. Overall, days on hand fell by 7.

就營運資金而言，我們對庫存狀況感到滿意。除 Mansco 外，我們的庫存增長了 8%，低於銷售增長，這是因為我們能夠利用 2016 年對分支機構庫存的大量投資，並且整個企業在該領域投入了更多精力。整體而言，庫存天數減少了 7 天。

Receivables growth, excluding Mansco, was up 20% in the fourth quarter '17. Accelerating growth generally and relative growth from National Accounts played a role as it has all year. In the fourth quarter, however, this was compounded by the end-of-week timing of holidays in December, which caused a significant volume of receivables to fall into 2018.

2017 年第四季度，不計 Mansco 的應收帳款增加了 20%。整體經濟成長加速以及國民帳戶的相對成長，像全年一樣，都發揮了作用。然而，到了第四季度，由於 12 月的假期都在周末，導致大量應收帳款計入 2018 年，情況變得更加複雜。

Payables, excluding Mansco, were up 34%. Last year's fourth quarter was unusually low with the wake of high CSP 16-related purchases.

不計入 Mansco 的應付帳款，成長了 34%。由於 CSP 16 相關採購量龐大，去年第四季業績異常低迷。

That's all for our formal presentation. So with that, operator, we'll turn it over for questions.

我們的正式報告就到此為止。那麼，操作員，我們現在把麥克風交給您提問。

(Operator Instructions) And our first question will come from the line of David Manthey with Baird.

（操作說明）我們的第一個問題將來自 Baird 公司的 David Manthey。

Just a quick 2-part question here, one mechanical and one soft side. First, could you level set everyone on your FIFO accounting and how the price increases flow through the P&L? I'm just interested in this price increase that you recently put through. If you could talk about maybe magnitude and timing of the effect on both the top line and the gross margin as it flows through? That's one.

這裡有個簡單的兩部分問題，一部分是技術方面的，一部分是技術方面的。首先，您能否向大家統一解說先進先出法（FIFO）的會計方法，以及價格上漲如何影響損益表？我只是對你們最近這次提價很有興趣。如果您能談談這種影響對營收和毛利率的程度和時間影響，那就太好了？這是其中之一。

And then, second, what is the main message that you as a leadership team are sending out to the field this year? And I know you mentioned a few things. I'm wondering about aggression on new business and focus on value and Onsite and price increases. But, Dan, when you had that conversation with your RVPs, what is the #1 most important message that you would have those guys and gals take out to their teams and their customers today?

其次，身為領導團隊，你們今年要向第一隊傳達的主要訊息是什麼？我知道你提到了一些事情。我正在考慮積極拓展新業務、注重價值、現場服務和價格上漲的問題。但是，丹，當你和你的區域副總裁們進行那次談話時，你希望他們今天向他們的團隊和客戶傳達的最重要的訊息是什麼？

I'm going to start with the second part, then I'll go to the first. And, Sheryl or Holden, feel free to chime in if you feel my answer is somewhat lacking.

我先從第二部分開始，然後再講第一部分。Sheryl 或 Holden，如果你們覺得我的回答不夠充分，請隨時補充。

As far as the main message, last year talked about growing -- a simple message, grow sales and grow earnings. We had struggled for a few years, obviously amplified by the oil and gas slowdown and how it hit our business. The message this year just had one more thing to it: Grow sales and grow earnings. Let's grow it double-digit. And then, the concept of think big.

至於主要訊息，去年我們談到了成長——一個簡單的訊息，就是提高銷售額和提高利潤。過去幾年我們一直舉步維艱，石油和天然氣行業的放緩以及它對我們業務的衝擊顯然加劇了這種情況。今年的訊息又多了一點：提高銷售額和增加利潤。讓我們實現兩位數的成長。然後，就是胸懷大志的概念。

And think big is about -- one thing we did in 2017 is we worked with all of our district leaders. They all -- all of our district managers came in for a 2-day workshop -- 1.5-day workshop and it was about developing a business plan, a 5-year business plan for their business. And think big, that's basically this: Have a plan. Incorporate our growth drivers: Onsite, vending, construction, CSP 16, National Accounts, international. Incorporate that into your plan and vet your plan. Share it with your peers. Share it with a regional, whether it's your region or not that you respect, share it with somebody else. And then, share it with every member of your team because if you get great people pursuing a common goal, you can accomplish great things and you can get the most out of great people and be more successful and move faster. So our biggest message is have a plan and grow your business and think big about it.

而「胸懷大志」的意義在於——我們在 2017 年所做的一件事就是與所有地區領導人合作。我們所有的區域經理都來參加了一個為期兩天的研討會（實際上是一天半），內容是關於制定商業計劃，為他們的企業製定一個五年商業計劃。要有遠大的目標，其實就是：擬定計畫。融入我們的成長驅動因素：現場服務、自動販賣、建築、CSP 16、全國客戶、國際業務。將此納入你的計劃並仔細審查你的計劃。分享給你的同伴。把它分享給一個你所在地區或你尊重的人，無論那是不是你所在的地區，都把它分享給其他人。然後，與團隊中的每一位成員分享，因為如果讓優秀的人才朝著共同的目標努力，你就能成就偉大的事情，就能最大限度地發揮優秀人才的潛力，從而取得更大的成功，發展得更快。所以我們最想傳達的訊息是：制定計劃，發展你的業務，並且有遠大的目標。

In regards to -- we're on FIFO accounting and so part of our inventory increase for the year is inflation. I'm not going to get too deep into the magnitude because I just don't want to get ahead of ourselves, Dave, but it's really 1/3 of our business is fasteners and we're getting some squeezing there. And in some cases, we have mechanisms in place that's tethered to indices. As far as on a 6-month basis, there's ability to raise prices in an inflationary period and lower prices in a deflationary period, but we just need to be really crystal with that.

關於這一點——我們採用先進先出法（FIFO）會計，因此我們年度庫存增加的一部分是通貨膨脹。戴夫，我不想過多地談論規模，因為我不想操之過急，但緊固件確實占我們業務的三分之一，我們在這個領域正面臨一些擠壓。在某些情況下，我們已經建立了與指數掛鉤的機制。從六個月的角度來看，在通貨膨脹時期可以提高價格，在通貨緊縮時期可以降低價格，但我們需要對此有非常清晰的認識。

And I think part of the issue, so I'm getting a little bit beyond your question, part of the issue has been we've been -- we're so wired to grow, grow, grow -- and even Holden and I are having this conversation this morning. We're so wired to grow, grow, grow that sometimes, when you're having a conversation with a customer about turning on 5 or 7 additional facilities, you want to balance that with the pricing aspect. But our customers do value the service in what we bring, whether that's in our traditional branch model or our Onsite model and/or our vending model, and it's really impressing upon the way for us to provide that service is we need to price the product fairly. And we're doing a great job with that on our vending business and our non-fastener business in general. We're just not moving fast enough on our fastener business.

我認為問題的一部分在於，雖然我有點離題了，但問題的一部分在於我們——我們天生就渴望成長、成長、成長——甚至今天早上我和霍爾頓也在討論這個問題。我們天生就渴望成長、成長、再成長，以至於有時當你和客戶談論開設 5 或 7 個額外設施時，你會想要在價格上找到平衡。但我們的客戶確實重視我們提供的服務，無論是傳統的門市模式、現場模式或自動販賣模式，而真正令人印象深刻的是，我們提供這種服務的方式是我們需要對產品進行公平定價。我們在自動販賣機業務和非緊固件業務方面都做得非常出色。我們在緊固件業務方面進展不夠快。

So I'm going to shy away from quantifying the impact. But, Holden, if you want to chime in?

所以我打算避免量化其影響。但是，霍爾頓，你想插句話嗎？

Yes. And I might just chip in to Dave as well. If you recall, we actually had a modest increase in price that we put in, in the second quarter in response to what we -- we were seeing inflation in the channel. That really was intended to go after a sliver of the business. And at the end of the day, the amount that which price moved our revenue line this year was fairly immaterial. We felt that it achieved a goal, but it was fairly immaterial overall.

是的。我可能也會給戴夫一些錢。如果你還記得的話，我們實際上在第二季度進行了一次小幅漲價，以應對我們——我們看到通路中的通貨膨脹。那原本只是想搶佔一小部分市佔率。最終，價格對我們今年的營收影響微乎其微。我們覺得它達到了一個目標，但整體而言意義不大。

This iteration, now that demand has gotten stronger and cost inflation has gotten stronger, is intended to address a larger slice then we had done in the past. And it's really intended to address the same thing. It's to address the inflation that we see in what is a relatively long supply chain in the fastener business. So we would expect that the -- without getting into details about quantity, we expect it would be more significant this time around than it was certainly with the smaller one in the second quarter.

現在需求和成本通膨都更加強勁，因此本次迭代旨在解決比以往更大的市場需求。它實際上也是為了解決同一個問題。這是為了解決緊固件行業相對較長的供應鏈中出現的通貨膨脹問題。因此，我們預期——暫且不談具體數量——這次的規模肯定會比第二季較小的規模更大。

And, Holden, we could see some of that impact as early as first quarter, correct?

霍爾頓，我們最早可能在第一季就能看到一些影響，對嗎？

Yes. We would expect that we would be able to speak about it in concrete terms by that point.

是的。我們預計到那時我們將能夠就此進行具體討論。

And our next question will come from the line of Ryan Cieslak with Northcoast Research.

接下來，我們將向 Northcoast Research 的 Ryan Cieslak 提出一個問題。

First question, just really quick, a follow-up on the gross margin and replacing side of things. Holden or Dan, the way to think about the pricing implementation, is it give you the opportunity to once again get ahead of the COGS inflation on the fastener side? Or should we be thinking about this more as a catch-up to what maybe you saw here in the fourth quarter with regard to that headwind?

第一個問題，就簡單問一下，關於毛利率和替換的問題。霍爾頓或丹，思考定價實施的方式是，這是否能讓你再次有機會在緊固件方面領先於成本上漲？或者我們應該更多地將其視為第四季度可能出現的逆風情況的一種彌補？

Yes. I would characterize it as a bit of a catch-up in this regard. I mean, as Dan had indicated and I talked about in the script, was we did see the fastener gross margin in the fourth quarter tick down as a result of product inflation. So the group has done a great job staying ahead of it on the non-fastener side. We've gotten a little bit behind on the fasteners side. And so this is intended, as much as anything else, to begin to cover up some of that lag.

是的。我認為這方面算是有點追趕的意味。我的意思是，正如丹所指出的，也是我在劇本中談到的，由於產品價格上漲，我們確實看到第四季度緊固件的毛利率下降。因此，該團隊在非緊固件領域一直保持領先地位，做得非常出色。我們在緊固件方面有點落後了。因此，這樣做的目的很大程度是為了掩蓋一些滯後現象。

Okay. Okay. Fair enough. And then, Dan, when we think about the opportunity here in 2018, obviously '17 was a really good year for you guys in terms of top line. Not looking for specific guidance, but what maybe are some of the puts and takes on the top line in the context that comps do get more difficult? And what are maybe some of the incremental drivers? And how do we sort of maybe frame up what the opportunity could be? Can you actually grow again double digits? Or should we be maybe tempering our expectation, just given the comps get more difficult?

好的。好的。很公平。然後，丹，當我們考慮 2018 年的機會時，顯然 2017 年對你們來說，就營收而言，是一個非常好的一年。我並不是尋求具體的指導，只是在比較數據越來越難的情況下，對於營收成長有哪些值得關注的策略和看法？那麼，可能有哪些增量驅動因素呢？那麼，我們該如何界定這個機會究竟是什麼呢？你真的還能再長高到兩位數嗎？或者，考慮到比賽難度越來越大，我們是否應該降低預期？

As far as the opportunity drivers for 2018, here are the things that come to mind for me, we have great momentum in our business. As I mentioned earlier, our National Accounts team is executing about as well as I think we've ever executed in our history. We have built-in lift from the -- if you think about the vending machines that we've signed, that we've been deploying late in the year or throughout the year, but they've been strong throughout the year. The fact that we're removing fewer and so I feel better about our installed base and how we'll be able to grow that in the next 12 months. Our Onsites, we have a record number of Onsites that we signed. I feel we have great momentum coming into the year because, again, Onsite is now a company thing. It's not touching a small chunk of our business. It's touching the business. So I feel very good about our growth drivers in the couple of years momentum we have built into them and we're finishing the year strong.

至於 2018 年的機會驅動因素，我想到的是，我們的業務發展勢頭強勁。正如我之前提到的，我們的全國客戶團隊目前的執行力可以說是我們歷史上最好的。我們有內建的提升——想想我們已經簽約的自動販賣機，我們在年底或全年都在部署它們，但它們全年的銷售情況都很強勁。因為我們移除的用戶越來越少，所以我對我們的用戶基礎以及我們在未來 12 個月內如何發展壯大用戶基礎感到更有信心。我們的現場考察計畫數量創下了歷史新高。我覺得我們今年勢頭強勁，因為 Onsite 現在已經是公司的一項舉措了。這並沒有影響到我們業務的一小部分。它影響到了企業。因此，我對我們過去幾年累積的成長動力感到非常滿意，我們正以強勁的勢頭結束這一年。

And I feel really good about the tax bill signed late in the year and its ability to list -- to lift the industrial marketplace in the United States. The industrial marketplace -- and I don't want to get too deep into the discussion here, but let's be honest. The industrial marketplace in the United States has been the highest-taxed population on the planet. And we're unleashing some of that potential with the tax change. I mean, I look at our business. For example, I believe the S&P 500 had an effective tax rate of about 27% before the Tax Act. Our effective tax rate in recent years has been about 10 points higher than that, 36.5%, 37%. And we're indicative of that example. And I believe for a lot of our customers, it unleashes their potential to think bigger about their business and to grow faster. And we're going to participate in that growth because we're going to help support their business. And I feel really good about that coming into 2018 and I think it has some legs to it.

我對今年稍後簽署的稅收法案及其提振美國工業市場的能力感到非常滿意。工業市場——我不想在這裡深入討論，但說實話。美國的工業市場一直是全球稅負最重的族群。而稅改將釋放其中的一些潛能。我的意思是，我審視一下我們的業務。例如，我認為在稅法實施之前，標普500指數的實際稅率約為27%。近年來，我們的實際稅率比這個數字高出約 10 個百分點，分別為 36.5% 和 37%。我們就是這個例子的典型代表。我相信，對於我們的許多客戶來說，這能夠釋放他們的潛力，讓他們對自己的業務有更大的規劃，並實現更快的成長。我們將參與他們的發展中來，因為我們將幫助他們的業務發展。我對2018年充滿信心，我認為這種勢頭會持續下去。

And, Ryan, I just want to chip in one thing from the earlier question just to make sure everyone understands. Although product inflation was a factor in fourth quarter, it was well behind product mix, the impact of Mansco and the issues around freight in the quarter in terms of an impact. So when we say that we're sort of catching up, if you will, I don't want to leave the impression that we've fallen particularly far behind. It was a fairly minor factor in the fourth quarter. We're acting because we needed to make sure that it doesn't expand as an issue in 2018.

瑞恩，我只想補充一點關於先前問題的內容，以確保大家都明白。雖然產品通膨是第四季度的因素，但就影響而言，它遠不及產品組合、Mansco 的影響以及該季度貨運方面的問題。所以，當我們說我們正在迎頭趕上時，我不想給人留下我們已經落後很多的印象。在第四季度，這只是一個相當次要的因素。我們採取行動是因為我們需要確保這個問題在 2018 年不會擴大。

Fourth quarter was above. Fourth quarter was above.

第四季高於預期。第四季表現優於預期。

Okay. Got you. Just really quick on freight, Dan, just really quick, if I can. Is the freight component more of an internal or company-specific element or are you actually seeing some pressure from the market as well as it relates to maybe drivers? You mentioned fuel. How much of it is more company-specific and execution versus maybe some market headwinds that you guys are seeing right now?

好的。抓到你了。丹，如果可以的話，請盡量加快貨運速度。貨運環節更多的是公司內部因素還是公司特有的因素，或者您是否也感受到來自市場以及可能與司機相關的壓力？你提到了燃料。其中有多少是公司特有的問題和執行方面的原因，又有多少是你們目前遇到的某些市場逆風因素造成的？

It's us. It's company-specific. It -- a piece of it is seasonal, but that was true last year too. But when I look at the impact of fourth quarter versus third quarter a year ago and the impact of fourth quarter versus third quarter in 2017, it's us because what we're -- the relativeness of what we're charging for freight, the relativeness of how much we're doing internal versus external. We move most of the freight on our own trucks, which is a huge competitive advantage. We still manage it well.

是我們。這是公司特有的情況。其中一部分是季節性的，但去年也是如此。但當我比較一年前第四季與第三季以及 2017 年第四季與第三季的影響時，問題出在我們身上，因為我們——我們收取的運費相對而言，以及我們內部業務與外部業務的相對比例。我們大部分的貨物都是用自己的卡車運輸，這是一個巨大的競爭優勢。我們仍然處理得很好。

And I'm going to cut you off with that question and we'll go on to the next one because we're running a little a tight on time.

我要打斷你這個問題了，我們繼續下一個問題，因為時間有點緊了。

Our next question will come from the line of Chris Dankert with Longbow Research.

我們的下一個問題將來自 Longbow Research 的 Chris Dankert。

I guess, just trying to think a bigger picture here. How do we think about the pathway to profit kind of in the context of Onsite being such a key driver now and kind of how that looks versus traditional stores?

我想，我只是想從更宏觀的角度來看問題。在如今線上銷售成為關鍵驅動因素的背景下，我們該如何看待獲利路徑，以及它與傳統門市相比有何不同？

Yes. Okay. I'll take that one. The pathway to profit historically was about growing our average branch size. And as that would happen, the operating expenses dropped dramatically. A branch doing $50,000 to $80,000 a month has operating expenses well into the $30,000s. A branch doing $150,000 or $250,000 a month has operating expenses that are well down into the mid, if not low $20,000s, but in mid-$20,000s anyway. And so that's really what the pathway to profit was about was letting the inherent profitability shine through.

是的。好的。我選那個。從歷史上看，實現盈利的途徑是擴大我們平均分支機構的規模。隨著這種情況的發生，營運費用大幅下降。一家分行每月營業額為 5 萬至 8 萬美元，其營運費用則高達 3 萬美元以上。一家分行每月營業額為 15 萬或 25 萬美元，其營運費用即使不是 2 萬美元出頭，也肯定在 2 萬美元中段或低段。所以，通往獲利之路的真正意義就在於讓內在的獲利能力得以展現。

Onsite creates a challenge for pathway to profit in that your revenue growth is coming from our growth drivers. Vending helps our branch revenue grow. CSP helps our branch revenue grow. Onsite actually helped -- causes the branch revenue to either tread or maybe go back slightly. So if I have a $20,000 a month account in a $150,000 branch and I move that to an Onsite to turn it into a $100,000 customer, the branch goes from $150,000 to $130,000. And so we have negative leverage going on there, which is -- which hurts the pathway to profit concept. Our job is -- can all those other things get us back to $150,000.

現場營運為獲利之路帶來了挑戰，因為你的收入成長來自我們的成長動力。自動販賣機有助於我們分行增加收入。CSP幫助我們分公司增加收入。現場操作實際上有所幫助——導致分行收入要么持平，要么可能略有下降。所以，如果我在一個營業額為 15 萬美元的分行有一個每月 2 萬美元的帳戶，然後我把它轉移到現場帳戶，使它變成一個每月 10 萬美元的客戶，那麼該分行的營業額就會從 15 萬美元變為 13 萬美元。因此，這裡存在負槓桿效應，這損害了獲利路徑的概念。我們的任務是──其他所有事情能否讓我們回到15萬美元的目標。

The morphing that we've been talking about in our business where we've been closing some branches, so if we move out enough customers in a handful of branches, maybe we go from 10 branches in that market to 9, which lets us claw back a little bit to the pathway to profit because you -- the other 9 have a higher average. And so it's really about in -- on the branch side.

我們一直在談論的業務轉型，也就是關閉一些分行。如果我們能從少數幾家分行轉移足夠的客戶，也許我們在該市場的分行數量會從 10 家減少到 9 家，這讓我們能夠稍微挽回一些利潤，因為其他 9 家分行的平均利潤更高。所以關鍵在於──在分支這邊。

The pathway to profit is as healthy as ever. The Onsite creates a little challenge for it, but I'll take that challenge because it allows us to grow in Onsites in attractive business from the standpoint of our ability to grow with it and our ability to generate a return.

通往盈利的道路依然暢通無阻。現場服務給它帶來了一些挑戰，但我願意接受這個挑戰，因為它讓我們能夠在現場服務領域發展壯大，從我們與它共同成長和創造回報的能力來看，這是一個很有吸引力的業務。

And one thing I'll contribute to that is if you do look at the Onsites that predate this becoming a growth driver, the operating margins are above where the newer Onsites are and so there is a pathway to profit element that's there that's getting lost only because we're opening so many. The intermediate-term measure of success is the degree to which we use the pathway to profit to expand a maturing Onsite base and to begin to refill what we took out of the branch and then they sort of go down that pathway to profit a second time, if you will.

我還要補充一點，如果你看看那些在它成為增長動力之前就存在的門店，你會發現它們的運營利潤率高於新開的門店，所以盈利的途徑是有的，只是因為我們開了太多門店而被忽略了。中期衡量成功的標準是，我們利用獲利途徑擴大成熟的現場服務基礎，並開始彌補我們從分公司撤出的資金，然後他們又能再次沿著這條途徑獲得利潤。

And, I guess, if I could just pull it a tiny bit more, I guess, is there a way to break out the Onsites by age then? Maybe we can back into where you started the year, where you finished the year? But as far as you're trying to think about profitability and size, the net impact for 2018 and beyond, I mean, is there any way that we can kind of look at profitability by Onsite and then some divisions at all?

而且，我想，如果我能再稍微調整一下，有沒有辦法按年齡細分 Onsites 呢？或許我們可以回顧一下你年初的情況，以及你年底的情況？但是，就您考慮盈利能力和規模，以及對 2018 年及以後的淨影響而言，我的意思是，我們能否按現場服務部門以及一些部門來查看盈利能力？

So we do. We've not necessarily gone down the path of sharing that year-by-year with the investment community, but we do track that internally. I mean, what I would tell you is that from the point that you start an Onsite, probably between, call it, 6 quarters later, you're sort of where the Onsite should be and sort of a steady state. And then, from there, you begin doing the things you need to do to improve the margin and go down that pathway to profit, looking for product substitution opportunities, looking for additional volume opportunities. So that path down the pathway, it probably begins in earnest between 4 and 8 quarters after sort of the signing and that progress begins and then, ultimately, you get there. But with these new ones since it being a growth driver, I'm not sure I necessarily figured out the exact date that you get to a corporate margin on the Onsite business from the time you start.

我們就是這樣。我們並沒有一定要逐年與投資界分享這些數據，但我們會在內部追蹤這些數據。我的意思是，我想告訴你的是，從你開始進行現場培訓的那一刻起，大概過了六個季度，現場培訓就應該達到應有的水平，進入一種穩定狀態。然後，從那裡開始，你就可以著手做你需要做的事情來提高利潤率，走上獲利之路，尋找產品替代機會，尋找增加銷售的機會。所以，這條路很可能在簽約後的 4 到 8 個季度之間真正開始，然後取得進展，最終到達目的地。但是，由於這些新業務是成長的驅動力，我不確定我是否已經弄清楚從開始到現場業務達到公司利潤率的確切日期。

Our last question will come from the line of Robert Barry with Susquehanna.

最後一個問題將來自羅伯特·巴里與薩斯奎哈納的血脈。

I did actually want to follow-up on a comment Holden made during the prepared remarks about stability, expecting stability in gross margin in '18. Was that just a price/cost comment? And then, maybe we should layer on what has become this kind of normal 20 to 30 bp hit from mix from the growth drivers? So like a typical decline...

我其實想就霍爾頓在事先準備好的發言中提到的穩定性問題進行一些補充說明，他預計 2018 年毛利率將保持穩定。那隻是關於價格/成本的評論嗎？然後，或許我們應該加上這種已經成為正常的 20 到 30 個基點的成長驅動因素？就像典型的衰退一樣…

Yes. No. Thank you for clarifying. No, that's right. It was intended to be a comment about what we're doing with pricing. And it was really twofold. One to just to let you know that we are taking sort of product inflation seriously and taking steps to do it, but the second is we're not necessarily looking at this as an opportunity to boost our margin, if you will, right? We're trying to defend our margin from product inflation that everybody in the marketplace knows that's there. And so I think that you're right to think about it in terms of it's intended to offset product inflation and then the other variables that are always there on gross margin are still there.

是的。不。謝謝你的澄清。沒錯。這是想對我們目前的定價策略發表一些評論。實際上，這包含兩方面原因。第一，我們想讓大家知道，我們正在認真對待產品價格上漲的問題，並且正在採取措施應對；第二，我們並不認為這是一個提高利潤率的機會，對吧？我們正在努力保護我們的利潤率，免受產品價格上漲的影響，市場上的每個人都知道這一點。所以我認為你的想法是對的，它的目的是為了抵消產品通膨，而其他一直影響毛利率的變數仍然存在。

Right. So thinking about just kind of level setting a base case for '18, it seems like price is offsetting cost inflation and then you've got the 20 to 30 basis point impact from the growth drivers and so maybe that's kind of what we see. Would that be kind of a good expectation?

正確的。因此，如果考慮為 2018 年設定一個基準情況，價格似乎抵消了成本上漲，然後成長驅動因素又帶來了 20 到 30 個基點的影響，所以這可能就是我們看到的情況。這算是合理的期望嗎？

Yes. I think it's a good place to start and then we'll try to do everything we can on freight and other elements, but I think a good place to start is what we said before, which is every year we kind of start off in the hole 20 to 30 basis points on gross margin because of product and customer mix. And when you see how fast our National Accounts are growing, and international's growing, the Onsites are growing, there's no reason to think that, that's any different in 2018 than it was in 2017.

是的。我認為這是一個不錯的起點，然後我們會盡一切努力改善貨運和其他方面，但我認為一個好的起點是我們之前說過的，那就是由於產品和客戶組合的原因，我們每年在毛利率方面都會處於虧損狀態，虧損幅度在 20 到 30 個基點之間。當你看到我們的國內客戶、國際客戶和現場服務客戶成長如此之快時，就沒有理由認為 2018 年的情況與 2017 年有任何不同。

Got it. And if that happens, do you think you could get the operating leverage...

知道了。如果這種情況發生，你認為你能獲得經營槓桿效應嗎？

Yes, Bob.

是的，鮑伯。

Sorry.

對不起。

I'm going to...

我打算…

You want us out there? I thought I had 1 minute left.

你們想讓我們出去嗎？我以為只剩1分鐘了。

We try to religiously keep this to 45 minutes because we realize it's earnings season and everybody's busy and has other calls to hop on.

我們盡量將通話時間控制在 45 分鐘以內，因為我們知道現在是財報季，每個人都很忙，還有其他電話會議要參加。

Fair enough.

很公平。

Thank you, everybody, for attending our call today. And as that last question touched on, it forces us to focus very, very intently on the operating expenses within our business, invest wisely to support growth, invest wisely to grow faster and -- but manage our expenses prudently.

感謝各位今天參加我們的電話會議。正如最後一個問題所提到的，這迫使我們非常、非常專注地關注我們業務的營運費用，明智地投資以支持成長，明智地投資以更快地成長，並且——謹慎地管理我們的費用。

Thanks, everybody. Have a good day.

謝謝大家。祝你有美好的一天。

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program and we may all disconnect. Everybody, have a wonderful day.

女士們、先生們，感謝各位參加今天的會議。我們的節目到此結束，大家可以斷開連結了。祝大家今天過得愉快。